Two fed ag surveys show fluctuations in farmland values

The Federal Reserve Bank of Chicago and the Federal Reserve Bank of St. Louis each issued updates on farmland values in the third quarter.

The Federal Reserve Bank of Chicago said Midwest farmland values were up from last year, but little had changed for the quarter.

On a year-over-year basis, farmland values in the Seventh Federal Reserve District gained 14 percent in the third quarter of 2013. However, the return of drought seemed to temper the year-over-year gain in Iowa farmland values. There was a 1 percent increase in “good” agricultural land values in the third quarter relative to the second quarter of 2013, according to the 195 agricultural bankers that provided responses for the October 1 survey. While District farmland values increased on the whole in the third quarter of 2013, this upward trend was not expected to continue: The respondents’ expectations leaned toward a decrease in farmland values in the fourth quarter of 2013, as only 4 percent anticipated an increase and 21 percent forecasted a decrease (75 percent foresaw stable farmland values). In the third quarter of 2013, agricultural credit conditions, by and large, saw improvement from a year ago.

But this improvement narrowed from those seen in recent quarters for the District. There was less financial stress, as repayment rates for non-real-estate farm loans were higher and as loan renewals and extensions were lower in the third quarter of 2013 relative to the same quarter last year.

Moreover, funds availability was higher than in the third quarter of 2012. And demand for non-real-estate loans was lower compared with a year ago. These last two factors contributed to the average loan-to-deposit ratio for the District (66.9 percent) being lower than what had been recorded a year earlier. The average interest rate on farm operating loans was unchanged in the third quarter of 2013, while the average interest rate on farm real estate loans edged up.

St. Louis Fed Ag Survey Results

Farmland values and cash rents were down in the third quarter of 2013 (relative to the previous quarter), according to the latest Agricultural Finance Monitor, published by the Federal Reserve Bank of St. Louis. Despite these declines, farm income rose modestly across the District served by the Bank.

The survey for the report was conducted Sept. 11 through Sept. 30, 2013. The results are based on the responses from 47 agricultural banks within the boundaries of the Eighth Federal Reserve District. The District comprises all or parts of the following seven Midwestern and MidSouth states: Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.

Because these initial data are not adjusted for any seasonal irregularities (should they exist), users are cautioned to interpret the results carefully. In particular, users are cautioned against drawing firm conclusions about longer-run trends in farmland values and agricultural lending conditions. Likewise, because the number of responses from each of the four zones in the District has been relatively small, entailing a higher-than-normal margin of error, we have decided to discontinue publishing zone-by-zone results. The results now refer to the entire Eighth District.